Historic Exploration

The vast majority of historic exploration work on the Fenelon Property has focused on the discovery and delineation of a high grade zone of gold mineralization known as the Discovery Zone. The Discovery Zone was first intersected by Cyprus Canada in 1998 and has been the subject of extensive surface and initial underground testing and development. More recently exploration has focused on base metal opportunities located within an extensive felsic volcanic and ultramafic intrusive sequence along the eastern portion of the property.

The Discovery Zone

Since initial testing in 1998 over 300 diamond drill holes have been completed on the Fenelon property with approximately 90% of the drilling being confined to the Discovery Zone area. Of the drilling focused on the Discovery Zone over 95% of the holes completed prior to Balmoral’s involvement tested the zone between depths of 10 and 100 metres vertical depth leaving the deeper potential of the zone largely untested.

Year

Holes

Metres

Target Area

1993

1

185

Discovery zone

1994

8

1425

Discovery zone

1994 – 95

57

14020

Discovery zone

1995 – 96

36 new

9851

Discovery zone

1996 – 97

38

6496

Discovery zone

1998

6 short

190

Discovery zone

2000

24

993

Discovery zone

2002

41

2354

Discovery zone

2005 – 06

33

9446

Discovery zone and extensions.

1997

39

9424

NS Grid ; NE Grid; GAP and NE grid

2006

12

5282

FFVC

2006

3

1347

Iron Formation North

2006

5

1569

Iron Formation East

2006

1

467

Jeremie Batholith margin

2007

6

3399

FFVC

2008

2

583

FFVC

1993 to 2008

270

67031

Historic drilling traced the Discovery Zone for just over 300 metres along strike, to vertical depths of 150 metres and over aggregate widths of 5 to 40 metres. The Zone remains open to depth and drilling completed in 2006 indicated potential along strike extensions of the high-grade gold mineralization an additional 300 metres northwest of the deposit at shallow depths.

A number of historic and NI 43-101 compliant resource estimates have been completed on the Discovery Zone, most recently in 2005 following the last major drill campaign on the property. The majority of these studies have focused on shallow resources above the 100 metre vertical level and all have indicated average gold grades well in excess of the average production grade for the Abitibi. None of these resource estimates are considered current to the Company and the Company is therefore prohibited under Canadian securities regulations from publishing these results including those which are NI43-101 compliant. The Company does not, at this point in time, have any plans to update the resource information for the Discovery Zone.

Historic Bulk Sampling and Pre-Feasibility Programs – Discovery Zone

In 2001, then operator International Taurus Resources Inc. conducted an open-pit bulk-sampling program on a portion of the Discovery Zone. The goals of this program were to confirm, through open-pit mining methods, the presence of significant high-grade gold at Fenelon; and to provide details of the geology, mining engineering and metallurgy of the deposit. The program results were very positive with the exposures in the open pit revealing additional mineralization structures which had not been fully evaluated by previous drilling. The gold-bearing structures were found to be oriented somewhat differently than initially thought resulting in an increase in estimated true widths and potential resources.

A bulk sample collected from the open-pit bulk resulted in test milling of a 14,000 tonne sample at Richmont’s Camflo mill in Val d’Or, Quebec which produced 4,339 ounces of gold. The metallurgical response of the sample to a conventional cyanidation mill flow-sheet was as predicted in previous tests, with an excellent gold recovery of over 97 percent achieved.

A mining lease was obtained, and is still active and underground development was started in October 2003. Site facilities and a full camp were constructed at that time and remain on site serving as Balmoral’s primary exploration camp. More than 250 metres of ramp, 550 metres of access workings and several stopes were developed in 2003-2004. The ramp has advanced to the 5195 elevation (55 metres below surface). An 8,300-tonne bulk sample was mined from the stopes, which produced 2,596 ounces of gold again via custom milling at the Camflo facility in Malartic, Quebec. International Taurus went bankrupt in 2004 and the mine workings were allowed to flood.

Underground drilling as part of the underground development program was highly successful with every drill hole intersecting a combination of strong gold-related rock alteration and/or gold mineralization. The underground exploration program supported a simpler mineralization model than originally interpreted at Fenelon with the high-grade gold mineralization being controlled by several through-going parallel shear zones within the host ultramafic.

In 2006-07 exploration began to focus outside the Discovery Zone trend. Testing of several EM and IP anomalies within the volcanic/intrusive sequence intersected copper-zinc-silver-gold mineralization within several felsic volcanic horizons suggesting potential for VMS mineralization. Follow-up testing of these discoveries intersected nickel-copper-PGE mineralization within an extensive ultramafic sequence intruded into the volcanic sequence.

Recent work by Balmoral has shown these nickel occurrences to hosted within the Grasset Ultramafic Complex and part of a district scale mineralized system which includes the high-grade H3 discovery on the adjacent Grasset Property owned by the Company.